South Korea removes 1M won threshold for crypto Travel Rule

South Korea’s Cabinet approved amendments to the Enforcement Decree of the Act on Reporting and Using Specified Financial Transaction Information on Tuesday, removing the roughly 1 million won threshold for the crypto Travel Rule. The change makes the rule apply to all transfers between registered virtual asset service providers. Receiving platforms must collect identifying information for both sender and recipient on every transfer between registered VASPs and may request missing data or reject transactions when required information is not available.

The Financial Intelligence Unit reported the threshold had allowed users to avoid reporting by splitting large transfers into many smaller ones. The agency cited a case where a user deposited about 200 million won into an exchange, bought Tether (USDT) and then executed 216 withdrawals each under 1 million won.

The amendments introduce new anti-money laundering requirements for transfers that involve overseas exchanges or personal wallets. Local registered VASPs must assess the risk posed by counterparties and decide which cross-border transfers to allow. Transfers to overseas exchanges classified as low risk will be permitted. Transfers involving other foreign exchanges or personal wallets will generally be allowed only when the sender and the recipient are the same person. Transactions involving counterparties deemed high risk will be prohibited.

Platforms must build suspicious transaction monitoring systems for transfers of at least 10 million won that involve foreign exchanges or personal wallets. Regulators reported suspected money laundering involving overseas platforms and personal wallets had increased and that gaps in earlier rules were exploited.

The decree tightens VASP registration standards, increasing requirements for financial health, internal controls, staffing and infrastructure and expanding scrutiny of major shareholders. The registration provisions take effect on Aug. 20; existing providers have an additional year to meet some financial, staffing, infrastructure and internal control requirements. The expanded Travel Rule and the transfer-related AML measures will take effect six months after the decree is promulgated.

Exchanges will need to update compliance systems to capture full originator and beneficiary data for all on-platform transfers, enhance risk assessments for foreign counterparties and set up monitoring for larger cross-border movements and personal wallet flows. Platforms that cannot obtain required information may block transfers or refuse service for customers linked to high-risk counterparties.